1.  We have audited the attached Balance Sheet of SRF LIMITED (the
 Company) as at March 31, 2011, the Profit and Loss Account and the
 Cash Flow Statement of the Company for the year ended on that date,
 both annexed thereto. These financial statements are the responsibility
 of the Companys Management. Our responsibility is to express an
 opinion on these financial statements based on our audit.
 
 2.  We conducted our audit in accordance with the auditing standards
 generally accepted in India. Those Standards require that we plan and
 perform the audit to obtain reasonable assurance about whether the
 financial statements are free of material misstatements. An audit
 includes examining, on a test basis, evidence supporting the amounts
 and the disclosures in the financial statements. An audit also includes
 assessing the accounting principles used and the significant estimates
 made by the Management, as well as evaluating the overall financial
 statement presentation. We believe that our audit provides a reasonable
 basis for our opinion.
 
 3.  As required by the Companies (Auditors Report) Order, 2003 (CARO)
 issued by the Central Government in terms of Section 227(4A) of the
 Companies Act, 1956, we enclose in the Annexure a statement on the
 matters specified in paragraphs 4 and 5 of the said Order.
 
 4.  Further to our comments in the Annexure referred to in paragraph 3
 above, we report as follows:
 
 a.  we have obtained all the information and explanations which to the
 best of our knowledge and belief were necessary for the purposes of our
 audit;
 
 b.  in our opinion, proper books of account as required by law have
 been kept by the Company so far as it appears from our examination of
 those books;
 
 c.  the Balance Sheet, the Profit and Loss Account and the Cash Flow
 Statement dealt with by this report are in agreement with the books of
 account;
 
 d.  in our opinion, the Balance Sheet, the Profit and Loss Account and
 the Cash Flow Statement dealt with by this report are in compliance
 with the Accounting Standards referred to in Section 211(3C) of the
 Companies Act, 1956;
 
 e.  in our opinion and to the best of our information and according to
 the explanations given to us, the said accounts give the information
 required by the Companies Act, 1956 in the manner so required and give
 a true and fair view in conformity with the accounting principles
 generally accepted in India:
 
 i.  in the case of the Balance Sheet, of the state of affairs of the
 Company as at March 31, 2011;
 
 ii.  in the case of the Profit and Loss Account, of the profit of the
 Company for the year ended on that date; and
 
 iii.  in the case of the Cash Flow Statement, of the cash flows of the
 Company for the year ended on that date.
 
 5.  On the basis of the written representations received from the
 Directors as on March 31, 2011 taken on record by the Board of
 Directors, none of the Directors is disqualified as on March 31, 2011
 from being appointed as a director in terms of Section 274(1)(g) of the
 Companies Act, 1956.
 
 Annexure to the Auditors Report
 (Referred to in paragraph 3 of our report of even date)
 
 Having regard to the nature of the Companys business / activities /
 result, paragraphs 4 (x) and (xiii) of Companies (Auditors Report)
 Order, 2003 (hereinafter referred to as the Order) are not applicable.
 
 i.  In respect of its fixed assets:
 
 a.  The Company has maintained proper records showing full particulars,
 including quantitative details and situation of the fixed assets.
 
 b.  The fixed assets were physically verified during the year by the
 Management in accordance with a regular programme of verification
 which, in our opinion, provides for physical verification of all the
 fixed assets at reasonable intervals.  According to the information and
 explanations given to us, no material discrepancies were noticed on
 such verification.
 
 c.  The fixed assets disposed off during the year, in our opinion, do
 not constitute a substantial part of the fixed assets of the Company
 and such disposal has, in our opinion, not affected the going concern
 status of the Company.
 
 ii.  In respect of its inventory:
 
 a.  As explained to us, the inventories were physically verified during
 the year by the Management at reasonable intervals.
 
 b.  In our opinion and according to the information and explanations
 given to us, the procedures of physical verification of inventories
 followed by the Management were reasonable and adequate in relation to
 the size of the Company and the nature of its business.
 
 c.  In our opinion and according to the information and explanations
 given to us, the Company has maintained proper records of its
 inventories and no material discrepancies were noticed on physical
 verification.
 
 iii. In respect of loans, secured or unsecured, granted by the Company
 to companies, firms or other parties covered in the Register under
 Section 301 of the Companies Act, 1956, according to the information
 and explanations given to us:
 
 a.  The Company has not granted any loans during the year. At the year
 end, the outstanding balance of loan is Rs. Nil and the maximum amount
 involved during the year is Rs. 606.02 lakhs in respect of unsecured
 loan granted to a wholly owned subsidiary in the previous year.
 
 b.  The rate of interest and other terms and conditions of such loan
 are, in our opinion, prima-facie, not prejudicial to the interests of
 the Company.
 
 c.  The receipts of principal amounts and interest have been regular/
 as per stipulations.
 
 d.  There are no overdue amount in respect of loan granted as referred
 to in paragraph (iii)(a) above and interest thereon.
 
 According to the information and explanations given to us, the Company
 has not taken any loans, secured or unsecured, from companies, firms or
 other parties listed in the Register maintained under Section 301 of
 the Companies Act, 1956.
 
 iv. In our opinion and according to the information and explanations
 given to us, there is an adequate internal control system commensurate
 with the size of the Company and the nature of its business with regard
 to purchases of inventory and fixed assets and the sale of goods and
 services. During the course of our audit, we have not observed any
 major weakness in such internal control system.
 
 v. According to the information and explanations given to us and having
 regard to the view taken by the Company that the transactions, which
 are subjected to the provisions of sub-section (6) of section 299 of
 the Companies Act, 1956 (the Act), are not required to be entered in
 the register maintained in pursuance of section 301 of the Act, there
 were no transactions during the year that were required to be entered
 in this register. Notwithstanding the Companys view regarding the
 provisions of sub-section (6) of section 299 of the Act in respect of
 certain transactions, exceeding the value of Rs. 5 lakhs entered into
 during the year with parties listed under the provisions of sub-section
 (3) of section 301 of the Act, these have been made at prices which are
 reasonable having regard to prevailing market prices at the relevant
 time.
 
 vi. In our opinion and according to the information and explanations
 given to us, the Company has complied with the provisions of Sections
 58A and 58AA or any other relevant provisions of the Companies Act,
 1956 and the Companies (Acceptance of Deposits) Rules, 1975 with regard
 to the deposits accepted from the public which have matured and are
 being refected under Unclaimed fixed deposits (including interest).
 According to the information and explanations given to us, no order has
 been passed by the Company Law Board or the National Company Law
 Tribunal or the Reserve Bank of India or any Court or any other
 Tribunal on the Company.
 
 vii. In our opinion, the internal audit functions carried out during
 the year by the Company and firms of Chartered Accountants appointed by
 the Management has been commensurate with the size of the Company and
 the nature of its business.
 
 viii. We have broadly reviewed the books of account maintained by the
 Company pursuant to the rules made by the Central Government for the
 maintenance of cost records under Section 209(1) (d) of the Companies
 Act, 1956 in respect of nylon and are of the opinion that prima-facie
 the prescribed accounts and records have been made and maintained.  We
 have, however, not made a detailed examination of the records with a
 view to determining whether they are accurate or complete. To the best
 of our knowledge and according to the information and explanations
 given to us, the Central Government has not prescribed the maintenance
 of cost records for any other product of the Company.
 
 ix.  According to the information and explanations given to us in
 respect of statutory dues:
 
 a.  The Company has generally been regular in depositing undisputed
 dues, including Provident Fund, Investor Education and Protection Fund,
 Employees State Insurance, Income-tax, Sales Tax, Wealth Tax, Service
 Tax, Customs Duty, Excise Duty, Works Contract Tax, Cess and other
 material statutory dues applicable to it with the appropriate
 authorities. We are informed that there are no undisputed statutory
 dues that are outstanding at the year-end for a period of more than six
 months from the date they became payable.
 
 b.  The details of dues of Income-tax, Wealth Tax, Sales Tax, Service
 Tax, Excise Duty, Customs Duty and Cess which have not been deposited
 as on March 31, 2011 on account of disputes are given below:
 
 Name of the Statute   Nature of the    Forum where Dispute is pending 
                       dues
   
 Central Excise Laws   Excise Duty      High Court
 
                                        Customs, Excise & Service Tax 
                                        Appellate Tribunal (CESTAT)
 
                                        Upto Commissioner (Appeals)
 
 Service Tax Laws      Service Tax      High Court
 
                                        Upto Commissioner (Appeals)
 
 Customs Laws          Customs Duty     Customs, Excise & Service Tax
                                        Appellate Tribunal (CESTAT)
 
                                        Upto Commissioner (Appeals)
 
 Sales Tax Laws        Sales Tax        High Court
 
                                        Sales Tax Appellate Tribunal
 
                                        Upto Commissioner (Appeals)
 
 Income Tax Laws       Income-tax       Commissioner (Appeals)
 
 Others                Electricity Cess High Court
 
 
 Name of the Statue   Period to which the           Amount*
                      amount relates (various       (Rs. lakhs) 
                      years covering the period)
 
 Central Excise Laws         1996-1997               213.79
 
                             1983-2008              6046.97
 
                             1992-2008               278.46
 
 Service Tax Laws            2006                      2.50
 
                             2005-2010               241.49
 
 Customs Laws                2004-2006                45.43
 
                             1998-2005                29.23
 
 Sales Tax Laws              2007-2008               673.30
 
                             1987-2008               102.28
 
                             1988-2010                37.74
 
 Income Tax Laws             2006-2007                26.53
 
 Others                      2007-2008                 6.00
 
 * amount as per demand orders including interest and penalty wherever
 quantified in the Order.
 
 The following matters, which have been excluded from the above table,
 have been decided in favour of the Company but the department has
 preferred appeals at higher levels. The details are given below:
 
 Name of the Statute     Nature of the dues   Forum where Dispute is
                                              pending
 
 Central Excise Laws     Excise Duty          Supreme Court
 
                                              High Court
 
                                              Customs, Excise & Service 
                                              Tax Appellate Tribunal 
                                              (CESTAT)
 
 Service Tax Laws        Service Tax          Customs, Excise & Service
                                              Tax Appellate Tribunal 
                                              (CESTAT)
 
 Sales Tax Laws          Sales Tax            High Court
 
                                              Rajasthan Tax Board
 
 Name of the Statue     Period to which the            Amount
                        amount relates (various       (Rs. lakhs) 
                        years covering the period)
 
 Central Excise LAws        1994-2001                    162.55
 
                            1994-1999                    131.35
 
                            1989-1995                    223.61
 
 Service Tax Laws           2005                           7.05
 
 Sales TAx Laws             1995-1996                    158.84
 
                            2001-2002                     22.43
 
 x. In our opinion and according to the information and explanations
 given to us, the Company has not defaulted in the repayment of dues to
 banks, financial institutions or debenture holders.
 
 xi. As the Company has not granted any loans and advances on the basis
 of security by way of pledge of shares, debentures and other
 securities, paragraph 4 (xii) of the Order, is not applicable.
 
 xii. As the Company is not dealing or trading in shares, securities,
 debentures and other investments, paragraph 4 (xiv) of the Order, is
 not applicable.
 
 xiii. In our opinion and according to the information and explanations
 given to us, the terms and conditions of the guarantees given by the
 Company for loans taken by wholly owned subsidiaries from banks are
 not, prima-facie, prejudicial to the interests of the Company.
 
 xiv. In our opinion and according to the information and explanations
 given to us, the term loans have been applied for the purposes for
 which they were obtained.
 
 xv. In our opinion and according to the information and explanations
 given to us and on an overall examination of the Balance Sheet, we
 report that funds raised on short-term basis have not been used during
 the year for long - term investment.
 
 xvi. As the Company has not made any preferential allotment of shares
 during the year, paragraph 4 (xviii) of the Order is not applicable.
 
 xvii. According to the information and explanations given to us, no
 security has been created for debentures issued during the year since
 they are unsecured.
 
 xviii. Since, the Company has not raised any money by way of public
 issue during the year, paragraph 4 (xx) of the Order, is not
 applicable.
 
 xix. To the best of our knowledge and according to the information and
 explanations given to us, no fraud by the Company and no fraud on the
 Company has been noticed or reported during the year.
 
                                           For DELOITTE HASKINS & SELLS
                                                  Chartered Accountants
                                             (Registration No. 015125N)
 
                                                        Manjula Banerji
                                                                Partner 
                                                (Membership No. 086423)
 
 Gurgaon, May 9, 2011